01—Abstract
Summary
Summary of the 10-K filed February 7, 2023. Cited figures are marked; the original filing is the authoritative source.
Loews Corporation is a holding company whose principal operating subsidiaries are CNA Financial Corporation (commercial property and casualty insurance, a 90.0%a owned subsidiary), Boardwalk Pipeline Partners, LP (natural gas and NGL transportation and storage, wholly owned) and Loews Hotels Holding Corporation (a chain of 26 hotels, wholly owned).
Net income attributable to Loews Corporation was $1,012 millionb, or $4.16 per diluted share, in 2022, compared with $1,578 million, or $6.07 per diluted share, in 2021. The 2021 result included a $555 million pretax gain ($438 million after tax) on the sale of 47% of Altium Packaging. Excluding that gain, net income decreased $128 million, driven by unfavorable limited partnership and common stock results and net losses from fixed income sales at CNA, partially offset by improved underwriting at CNA and a rebound in hotel results.
CNA's net income attributable to Loews fell to $802 millionc from $1,077 million, mainly due to lower net investment income and investment losses. Catastrophe losses declined to $247 million from $397 million, and CNA's Property & Casualty combined ratio was 93.2%. Boardwalk Pipelines' net income rose to $247 million from $235 million on higher revenues from growth projects and re-contracting at higher rates.
Loews Hotels & Co swung to $117 milliond of net income from a $14 million loss, as occupancy and room rates recovered. Parent Company cash and investments were $3.2 billion at year-end, and the company repurchased 12.7 million of its own shares in 2022 for $729 million in treasury stock purchases. The filing also highlights several forward-looking items: the adoption of ASU 2018-12 on January 1, 2023, which the company expects to reduce AOCI by approximately $2.1 billion (after tax and noncontrolling interests) as of the transition date, and a pending Delaware Supreme Court matter involving Boardwalk Pipelines, which reversed a trial court damages award of approximately $690 million and remanded the case for further proceedings.
02—Key points
Key Highlights
- Net income attributable to Loews Corporation was $1,012 million ($4.16 diluted EPS) in 2022, down from $1,578 million ($6.07 diluted EPS) in 2021, which included a $555 million pretax gain on the sale of 47% of Altium Packaging.
- CNA Financial (90.0% owned) contributed $802 million of net income attributable to Loews in 2022 versus $1,077 million in 2021, with catastrophe losses of $247 million compared with $397 million, and a Property & Casualty combined ratio of 93.2%.
- Boardwalk Pipelines net income attributable to Loews rose to $247 million from $235 million, supported by recently completed growth projects, re-contracting at higher rates and higher utilization-based revenues.
- Loews Hotels & Co returned to profitability with $117 million of net income attributable to Loews, compared with a $14 million loss in 2021, driven by considerably higher occupancy and average daily room rates.
- The company repurchased 12.7 million shares of its common stock in 2022 at an aggregate cost of $0.7 billion, and Parent Company cash and investments, net of receivables and payables, were $3.2 billion at December 31, 2022.
- Adoption of ASU 2018-12 on January 1, 2023 is expected to decrease AOCI by approximately $2.1 billion (after tax and noncontrolling interests) as of the January 1, 2021 transition date, with no expected impact on statutory capital and surplus.
- In Boardwalk Pipelines litigation, the Delaware Supreme Court reversed a trial court ruling that had awarded plaintiffs approximately $690 million plus interest and fees, and remanded the case to the trial court for further proceedings on claims not decided.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 7, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $14.04B$14.66B | −4.2% |
| Interest Expense | $378.00M$424.00M | −10.8% |
| Net Income | $822.00M$1.56B | −47.4% |
| EPS (Basic) | $3.39$6.02 | −43.7% |
| EPS (Diluted) | $3.38$6.00 | −43.7% |
| Shares Outstanding (Basic) | 242.83M259.67M | −6.5% |
| Shares Outstanding (Diluted) | 243.28M260.20M | −6.5% |
05—Questions
Frequently Asked Questions
Why did Loews' net income decline in 2022 compared with 2021?
Net income attributable to Loews Corporation fell to $1,012 million from $1,578 million. The 2021 result included a $555 million pretax gain ($438 million after tax) from the sale of 47% of Altium Packaging. Excluding that gain, net income decreased $128 million, driven mainly by unfavorable limited partnership and common stock results and net losses from fixed income sales at CNA, partly offset by improved CNA underwriting results and a recovery at Loews Hotels & Co.
How did CNA Financial perform in 2022?
CNA's net income attributable to Loews Corporation decreased $275 million to $802 million. The decline was primarily due to lower net investment income, driven by unfavorable limited partnership and common stock results, and investment losses versus gains in 2021. These were partly offset by improved underwriting results. Catastrophe losses were $247 million, down from $397 million in 2021, and CNA's Property & Casualty combined ratio was 93.2%.
What are the main drivers of Boardwalk Pipelines' results?
Boardwalk Pipelines' net income attributable to Loews rose to $247 million from $235 million, and EBITDA increased to $892 million from $834 million. Total revenues rose $97 million, mainly from transportation revenues of $75 million tied to recently completed growth projects, re-contracting at higher rates and higher utilization-based revenues. Approximately 87% of its 2022 revenues came from capacity reservation fees under firm contracts.
What capital allocation actions did Loews take in 2022?
Loews purchased 12.7 million shares of its common stock for $729 million in cash and received $978 million in cash dividends from subsidiaries, including a special $486 million dividend from CNA. It paid $61 million in dividends to shareholders and made a $79 million contribution to Altium Packaging. Parent Company cash and investments, net of receivables and payables, were $3.2 billion at year-end, compared with $3.4 billion a year earlier.
What significant accounting change and legal matter could affect Loews going forward?
Loews will adopt ASU 2018-12 for long-duration contracts, including CNA's long term care business, effective January 1, 2023. The company expects this to decrease AOCI by approximately $2.1 billion (after tax and noncontrolling interests) at the January 1, 2021 transition date, though it will not affect statutory capital and surplus. Separately, the Delaware Supreme Court reversed a trial court award of approximately $690 million to plaintiffs in the Boardwalk Pipelines class action and remanded the case for further proceedings.
06—Continue